Papers - Natural

Erwin Bulte, John A List, Daan van Soest

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Social scientists have recently explored how framing of gains and losses affects productivity. We conducted a field experiment in peri-urban Uganda, and compared output levels across 1000 workers over isomorphic tasks and incentives, framed as either losses or gains. We find that loss aversion can be leveraged to increase the productivity of labor. The estimated welfare costs of using the loss contract are quite modest -- perhaps because the loss contract is viewed as a (soft) commitment device.

Basil Halperin, Benjamin Ho, John A List, Ian Muir

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We use a theory of apologies to analyze a nationwide field experiment involving 1.5 million Uber ridesharing consumers who experienced late rides. Several insights emerge. First, apologies are not a panacea: the efficacy of an apology and whether it may backfire depend on how the apology is made. Second, across treatments, money speaks louder than words - the best form of apology is to include a coupon for a future trip. Third, in some cases sending an apology is worse than sending nothing at all, particularly for repeated apologies. For firms, caveat venditor should be the rule when considering apologies.

Andreas Leibbrandt, John A List

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Labor force composition and the allocation of talent remain of vital import to modern economies. For their part, governments and companies around the globe have implemented equal employment opportunity (EEO) regulations to influence labor market flows. Even though such regulations are pervasive, surprisingly little is known about their impacts. We use a natural field experiment conducted across 10 U.S. cities to investigate if EEO statements in job advertisements affect the first step in the employment process, application rates. Making use of data from nearly 2,500 job seekers, we find considerable policy effects, but in an unexpected direction: the presence of an EEO statement dampens rather than encourages racial minorities willingness to apply for jobs. Importantly, the effects are particularly pronounced for educated job seekers and in cities with white majority populations. Complementary survey evidence suggests the underlying mechanism at work is "tokenism", revealing that EEO statements backfire because racial minorities avoid environments in which they are perceived as regulatory, or symbolic, hires rather than being hired on their own merits. Beyond their practical and theoretical importance, our results highlight how field experiments can significantly improve policy making. In this case, if one goal of EEO regulations is to enhance the pool of minority applicants, then it is not working.

Alec Brandon, John A List, Robert D Metcalfe, Michael K Price, Florian Rundhammer

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This study considers the response of household electricity consumption to social nudges during peak load events. Our investigation considers two social nudges. The first targets conservation during peak load events, while the second promotes aggregate conservation. Using data from a natural field experiment with 42,100 households, we find that both social nudges reduce peak load electricity consumption by 2 to 4% when implemented in isolation and by nearly 7% when implemented in combination. These findings suggest an important role for social nudges in the regulation of electricity markets and a limited role for crowd out effects.

Syon Bhanot

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Perception of peer rank, or how we can perform relative to out peers, can be a powerful motivator. While research exists on the effect of social information on decision making, there is less work on how ranked comparisons with our peers influence our behavior. This paper outlines a field experiment conducted with 3896 households in Castro Valley, California, which uses household mailers with various forms of social information and peer rank messaging to motivate water conservation. The experiment tests the effect of a visible peer rank on water use, and how the competitive framing of rank information influences behavioral response. The results show that households with relatively low or high water use in the pre-treatment period responded differently to how rank information was framed. I find that a neutrally-framed peer rank caused a small "boomerang effect" (i.e., an increase in average water use) for low water households, but this effect was eliminated by competitive framing. At the same time, a competitively-framed peer rank demotivated high water use households, increasing their average water use over the full period of the experiment. This result is supported by evidence that the competitive frame on rank information increased water use for households who ranked "last" in the peer group - a detrimental "last place effect" from competitively-framed rankings.

Damon Clark, David Gill, Victoria Prowse , Mark Rush

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Will college students who set goals for themselves work harder and achieve better outcomes? In theory, setting goals can help present-biased students to mitigate their self-control problem. In practice, there is little credible evidence on the causal effects on goal setting for college students. We report the result of two field experiments that involved almost four thousand college students in total. One experiments asked treated students to set goals for performance in the course; the other asked treated students to set goals for a particular task (completing online practice exams). Task-based goals had robust positive effects on the level of task completion, and task-based goals also increased course performance. We also find that performance-based goals had positive but small effects on course performance. We use a theoretical framework that builds on present bias and loss aversion to interpret our results. Since task-based goal setting is low-cost, scalable and logistically simple, we conclude that our findings have important implications for educational practice and future research.

Eszter Czibor, David Jimenez-Gomez, John A List

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What was once broadly viewed as an impossibility - learning from experimental data in economics - has now become commonplace. Governmental bodies, think tanks, and corporations around the world employ teams of experimental researchers to answer their most pressing questions. For their part, in the past two decades academics have begun to more actively partner with organizations to generate data via field experimentation. While this revolution in evidence-based approaches has served to deepen the economic science, recently a credibility crisis has caused even the most ardent experimental proponents to pause. This study takes a step back from the burgeoning experimental literature and introduces 12 actions that might help to alleviate this credibility crisis and raise experimental economics to an even higher level. In this way, we view our "12 action wish list" as discussion points to enrich the field.

Maya Haran Rosen , Orly Sade

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Define contribution mechanism combined with a dynamic job market can affect the sum of retirement savings and the choices of plans and products. Hence, it is important for regulators to engage servers to manage the accounts they accumulate over the years. In 2013-2014 the Israeli regulator reached out to the population, recommending the use of a website to help individuals find inactive retirement savings accounts and close them (withdraw the savings or transfer them to active accounts). The government's efforts did not result in the closure of most of the inactive accounts. Proprietary data indicate that those who closed the inactive accounts live in central locations with a higher socioeconomic index. Survey data indicate that those who lacked financial literacy and confidence in their financial knowledge were less likely to take financial actions. Using a controlled field experiment, we also provide evidence that an intervention with a human touch can promote greater involvement.

Ran Kivetz, Oleg Urminsky, Yuhuang Zheng

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The goal-gradient hypothesis denotes the classic finding from behaviorism that animals expend more effort as they approach a reward. Building on this hypothesis, the authors generate new propositions for the human psychology of rewards. They test these propositions using a field experiment, secondary customer data, paper-and-pencil problems, and Tobit and logit models. The key finding indicate that (1) participants in a real cafe reward program purchase coffee more frequently the closer they are to earning a free coffee; (2) Internet users who rate songs in return for reward certificates visit the rating Web site more often, rate more songs per visit, and persist longer in the rating effort as they approach the reward goal; (3) the illusion of progress toward the goal induces purchase acceleration (e.g., customers who receive a 12-stamp coffee card with 2 preexisting "bonus" stamps complete the 10 required purchases faster than customers who receive a "regular" 10-stamp card) and (4) a stronger tendency to accelerate toward the goal predicts greater retention and faster reengagement in the program. The conceptualization and empirical findings are captured by a parsimonious goal distance model, in which effort investment is a function of the proportion of original distance remaining to the goal. In addition, using statistical and experimental controls, the authors rule out alternative explanations for the observed goal gradients. They discuss the theoretical significance of their findings and the managerial implications for incentive systems, promotions, and customer retention.

Syon Bhanot

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Social norms messaging campaigns are increasingly used to influence human behavior, with social science research generally finding that they have modest but meaningful effects. One aspect of these campaigns in practice has been the inclusion of injunctive norms messaging, designed to convey a social judgement about one's behaviors (often in the form of encouraging or discouraging language, or a visual smiley or frowny face). While some prominent research has provided support for the use of such messaging as a tool for positive behavior change, causal evidence on the effect of injunctive norms messaging as a motivator (as opposed to just one part of a multifaceted messaging campaign) is limited. This paper presents a field experiment on water conservation behavior conducted by an organization in California, involving over 40,000 households, which provides some of the most precise evidence to date regarding the effect of injunctive norms on decision making. I find that not only do injunctive norms encourage conservation behavior, there is also no evidence that they discourage individuals from further attending norms messaging-regardless of whether the social judgement conveyed is negative or positive. Taken together, this suggests that injunctive norms are a useful tool in "nudge"-style campaigns tackling behavior change.

Haoran He, David Neumark, Qian Weng

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We explore compensating differentials for job flexibility, using a field experiment conducted on a Chinese job board. Our job ads differ randomly regarding when one works (time flexibility) and where one works (place flexibility). We find strong evidence that workers value job flexibility - especially regarding place of work. Application rates are higher to flexible jobs, conditional on the salary offered. Additional survey evidence indicates that workers are willing to take lower pay for more flexible jobs. Non-experimental job board data do not indicate that workers value job flexibility, reinforcing the difficulty of estimating compensating differentials from observational data.

Amanda Bayer, Syon Bhanot, Fernando Lozano

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No abstract available

Maria De Paola, Francesca Gioia, Vincenzo Scoppa

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We ran a field experiment to investigate whether individual performance in teams depends on the gender of the leader. About 430 students from an Italian University took an intermediate exam that was partly evaluated on the basis of teamwork. Students were randomly matched in teams of three and in each team we randomly chose a leader with the task of coordinating the work of the team. We find a positive and significant effect of female leadership on team performance. This effect is driven by the higher performance of team members in female led teams rather than due to an improvement in the leader's performance. We also find that, in spite of the higher performance of female led teams, male members tend to evaluate female leaders as less effective, whereas female members are more sympathetic towards them.

Syon Bhanot

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Across domains, people struggle to follow through on their commitments. This can happen for many reasons, including dishonesty, forgetfulness, or insufficient intrinsic motivation. Social scientists have explored the reasons for persistent failures to follow through. suggesting that eliciting explicit promises can be an effective way to motivate action. This paper presents a field experiment that tests the effect of explicit promises, in the form of "honor pledges", on loan repayment rates. The experiment was conducted with LendUp, an online lender, and targeted 4,883 first time-borrowers with the firm. Individuals were randomized into four groups, with the following experimental treatments: (1) having no honor pledge to complete (control); (2) signing a given honor pledge; (3) re-typing the same honor pledge as in (2) before signing; and (4) coming up with a personal honor pledge to type and sign. I also randomized whether or not borrowers were reminded of the honor pledge they signed prior to repayment deadline. The results suggest that the honor pledge treatments had minimal impacts on repayment, and that reminders of the pledges were similarly ineffective. This suggests that borrowers who fail to repay loans do so not because of dishonesty or behavioral biases, but because they suffer from true financial hardship and are simply unable to repay.

Syon Bhanot, Gordon Kraft-Todd, David Rand, Erez Yoeli

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We partnered with the School District of Philadelphia (SDP) to run a randomized experiment testing interventions to increase teacher participation in an annual feedback survey, an uncompensated task that requires a teacher's time but helps the educational system overall. Our experiment varied the nature of the incentive scheme used, and the associated messaging. In the experiment, all 8,062 active teachers in the SDP were randomly assigned to receive one of four emails using a 2x2 experimental design; specifically, teachers received a lottery-based financial incentive to complete the survey that was either "personal" (a chance to win one of fifteen $100 gift cards for themselves) or "social" (a chance to win one of fifteen $100 gift cards for supplies for their students), and also received email messaging that either did or did not make salient their identity as an educator. Despite abundant statistical power, we find no discernible differences across our conditions on survey completion rates. One implication of these null results is that from a public administration perspective, social rewards may be preferable since funds used for this purpose by school districts go directly to students (through increased expenditure on student supplies), and do not seem less efficacious than personal financial incentives for teachers.

Indranil Goswami, Oleg Urminsky

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We present a complete empirical case study of fundraising decisions that demonstrates the importance of in-context field experiments. We first design novel matching-based fundraising appeals. We derive theory-based predictions from the standard impure altruism model and solicit expert opinion about the potential performance of our interventions. Both theory-based predictions and descriptive advice suggest improved fundraising performance from a framing intervention that credited donors for the matched funds (compared to a typical match framing). However, results from a natural field experiment with prior donors of a non-profit showed significantly poorer performance of this framing compared to a regularly framed matching intervention. This surprising finding was confirmed in a second natural field experiment, to establish the ground truth. Theoretically, our results highlight the limitations of both impure altruism models and of expert opinion in prediction complex "warm glow" motivation. More practically, our results question the availability of useful guidance, and suggest the indispensability of field testing for interventions in fundraising.

Indranil Goswami, Oleg Urminsky

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How does setting a donation option as the default in a charitable appeal affect people's decisions? In eight studies, comprising 11,508 participants making 2,423 donation decisions in both experimental settings and a large scale-natural field experiment, we investigate the effect of "choice-option" defaults on the donation rate, average donation amount, and the resulting revenue. We find (1) a "lower-bar" effect, where defaulting a low amount increases donation rate, (2) a "scale-back" effect where low defaults reduce average donation amounts and (3) a "default-distraction' effect, where introducing any defaults reduces the effect of other cues, such as positive charity information. Contrary to the view that setting defaults will backfire, defaults increased revenue in our field study. However, our findings suggest that defaults can sometimes be a "self-cancelling" intervention, with countervailing effects of default option magnitude on decisions and resulting in no net effect on revenue. We discuss the implications of our findings for research on fundraising specifically, for choice architecture and behavioral interventions more generally, as well as for the use of "nudges" in policy decisions.

Daniel Hedblom, Brent R Hickman, John A List

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We develop theory and a tightly-linked field experiment to explore the supply side implications of corporate social responsibility (CSR). Our natural field experiment, in which we created our own firm and hired actual workers, generates a rich data set on worker behavior and responses to both pecuniary and CSR incentives. Making use of a novel identification framework, we use these data to estimate a structural principal-agent model. This approach permits us to compare and contrast treatment and selection effects of both CSR and financial incentives. Using data from more than 110 job seekers, we find strong evidence that when a firm advertises work as socially-oriented, it attracts employees who are more productive, produce higher quality work, and have more highly valued leisure time. In terms of enhancing the labor pool, for example, CSR increases the number of applicants by 25 percent, an impact comparable to the effect of a 36 percent increase in wages. We also find an economically important complementarity between CSR and wage offers, highlighting the import of using both to hire and motivate workers. Beyond lending insights into the supply side of CSR, our research design serves as a framework for causal inference on other forms of non-pecuniary incentives and amenities in the workplace, or any other domain more generally.

Rudolf Kerschbamer, Daniel Neururer, Matthias Sutter

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Honesty is a fundamental pillar for cooperation in human societies and thus for their economic welfare. However, humans do not always act in an honest way. Here, we examine how insurance coverage affects the degree of honesty in credence good markets. Such markets are plagued by strong incentives for fraudulent behavior of sellers, resulting in estimated annual costs of billions of dollars to costumers and the society as a whole. Prime examples of credence goods are all kinds of repair services, the provision of medical treatments, the sale of software programs, and the provision of taxi rides in unfamiliar cities. We examine in a natural field experiment how computer repair shops take advantage of costumers' insurance for repair costs. In a control treatment, the average repair price is about EUR 70, whereas the repair bill increases by more than 80% when the service provider is informed that an insurance would reimburse the bill. Our design allows decomposing the sources of this economically impressive difference, showing that it is mainly due to the overprovision of parts and overcharging of working time. A survey among repair shops shows that the higher bills are mainly ascribed to insured costumers being less likely to be concerned about minimizing costs because a third party (the insurer) pays the bill. Overall, our results strongly suggest that insurance coverage greatly increases the extent of dishonesty in important sectors of the economy with potentially huge costs to costumers and whole economies.

Michal Krawczyk, Joanna Rachubik

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Despite having the same probability of being drawn, certain number combinations are more popular than others among the lottery players. One explanation of such preferences is the representativeness heuristic (RH). Unlike previous hypothetical experiments, in the present experiment we used real-life lottery tickets, involving a high payout in case of winning to elicit true preferences. To verify if people prefer randomly-looking number combinations, participants were to choose a preferred ticket. To validate if it is likely to be caused by RH, we correlated preference for "random" sequences with the belief in dependence between subsequent coin tosses. We confirm that people strongly prefer random sequences and that a non-trivial fraction believes in dependence between coin tosses. However, there is no correlation between these two tendencies, questioning the RH explanation. By contrast, participants who have an (irrationally) strong preference for number combinations also tend to make (irrationally) specific predictions in the coin task. Unexpectedly, we find that females are considerably more likely to belong to this groups than males.